July 10, 2014

Germany on Tuesday offered to change a planned reform of its
renewable energy policy, trying to end a standoff with the European Commission
over green power subsidies and to meet a deadline needed to secure rebates for
German industry.

In an amended draft law seen by Reuters, the government
proposed that German industrial companies producing their own electricity in
new renewable energy or combined heat-power plants would pay a higher surcharge
than previously planned.

Germany presented the changes after the Commission raised
new sticking points on Monday, undoing what had appeared to be an agreed deal.

But Berlin indicated it would resist EU demands to exempt
imported electricity from an energy surcharge.

Christian Democrat deputy parliamentary floor leader Michael
Fuchs said Chancellor Angela Merkel would have to intervene with Commission
President Jose Manuel Barroso on the issue.

"Our happiness with the European Commission's behavior
in the last few days has been limited," said Social Democrat deputy
parliamentary floor leader Hubertus Heil.

Germany had until Tuesday to bring its green energy reforms
into line with the bloc's competition laws, including requirements to make
heavy industry pay a surcharge for power they produce at their own plants.

The Bundestag is due to vote on the law on Friday after
parliamentary groups approve it later on Tuesday. German industry cannot apply
for billions of euros of exemptions from the green energy surcharge if Berlin
misses the deadline.

So far energy-intensive industries have been exempt from the
surcharge, or have enjoyed large discounts, something they say they need to
remain competitive.

According to the new draft, industry producing its own
electricity in new renewable or combined heat-power plants will pay 30 percent
of the current 6.24 cents per kilowatt hour surcharge in 2015, rising to 35
percent in 2016 and 40 percent from 2016.

Existing plants and small plants such as solar panels on
roofs would remain exempt from the surcharge, while other new plants would pay
the full surcharge. The plan until now had been for industry to pay 15 percent
of the surcharge.

"It would be a massive own goal in terms of industrial
policy if politicians were to put a surcharge on own power production used by
many sectors for decades," German industry lobby BDI chief Markus Kerber
said in a statement.

"That's the opposite of protecting confidence. German
industry needs absolute clarity and long-term security to plan."

The EU said on Tuesday it had not yet taken a position on
the reworked draft law but had no problem in general with exempting households
from paying the surcharge.

Subsidized renewable energy, led by wind and solar power,
have sparked a political debate in Germany over high prices for consumers, who
pay mandatory charges for green energy.